TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 844
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....y 2018, if the said supplies are in relation to an housing project enjoying Infra status vide F No 13/6/2009-INF dated 30th March 2017 of Government of India, in Ministry of Finance, Dept. of Economic Affairs? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statements of relevant facts having a bearing on the questions raised and statement containing the applicant's interpretation of law. The applicant M/s. Eiffel Hills And Dales Developers Pvt Ltd having GSTIN 27AABCE8028J1Z1 is a construction company engaged in the business of Mechanical, electrical and plumbing (MEP) turnkey project contracting & engi....
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.... contracts agreement for Electrical & Plumbing works to be undertaken by us and submitted in this behalf to the GST Dept. on 08.08.2018, the scope of work for electrical contract includes complete installation, testing & Commissioning of Substation Electrical Work, HT & LT Cabling work, DG & Cabling Work, Street light & Cabling Works whereas the scope of work for plumbing contract includes complete external plumbing work, laying of RCC hume pipes/Gl pipes/UPVC Pipes for storm water lines, construction of chambers. With reference to section 3(26) of General Clause Immovable Property is defined as "Land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth." Further Works Contract as defined in clause (119) of Section 2 of the CGST Act 2017, means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in execution of such contract. On conjoint reading of both the de....
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....s. (II) The GST is applicable to following as per notification No. 20/2017 CT (rate) dated 22/08/2017 as amended by notification No. 1/2018 rate dated 25/01/2018. The details of exemption at S. No. V are as under: (v) Composite supply of works contract as defined in clause (119) of sec 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to, (a) Railways, including monorail and metro; (vide notification No. 1/2018 central Tax rate dated 25/01/2018 excluding deleted and replaced by including) (b) A single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square meters per house in a housing project approved by competent authority empowered under the Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) Low cost houses up to a carpet area of 60 square meters per house in a housing project approved by the competent authority under (1) The "Affordable Housing in Partnership" component of the Housing for All (Urban) Mission/ Pr....
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.... u/Section 3(26) of the General Clause, "Immovable property" shall include land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. IV) In view of the above, the reply is under; 1) Whether MEP activities (Mechanical, Electrical, plumbing Works) undertaken by the applicant falls within the definition of composite supply of works contract as defined under Section 2(119) of Central GST Act? Ans: - As per the Annexure II of the application dated 28.06.18 for the Advance ruling, the MEP activity provided by the applicant includes design, engineering, supply, installation and commissioning of plumbing, firefighting and electrical infrastructure systems to a wide range of commercial projects. The definition of Immovable property as defined u/Section 3(26) of the General Clause, "Immovable property" shall include land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. If the aforesaid works become immovable property as permanently fastened to the building attached to Earth & transfer of property is involved in execution of contract then it ....
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....fficer- Please refer to this office letter of even no. dated 30.07.2018 and letter dated 14.08.2018 received from M/s. Eiffel Hills and Dales Developers Pvt. Ltd. on the above mentioned subject. In view of the above, the comments are as under; Q.1 Whether MEP activities (Mechanical, Electrical, plumbing Works) undertaken by the applicant falls within the definition of composite supply of works contract as defined under Section 2(119) of Central GST Act? Comments: As per further instructions received from Member, Advance ruling authority, GST, Mumbai during PH on 31.07.2018 that in order to determine the nature of supply i.e. "Composite Supply", we have to study the contract. The applicant has submitted separate Work Orders (Draft) for electrical work and plumbing work vide letter dated 14.08.2018 (received on 21.08.2018). Our observation is as below on the basis of extracts of the draft agreement: "ELECTRICAL WORK: Contract type: The Contract shall be divided into two types: A) TYPE-/-- ............. B) TYPE- 11 Supply of material under basic rates This shall be Item rate Contract for the supply of material for above mentioned works in Type - 1 Contract, for the pr....
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....le services. 2. They should be naturally bundled. 3. Supply in conjunction with each other, 4. in the ordinary course of business; 5. one of which is a principal supply. It is observed that "in the ordinary course of business", the customer controls only the quality of that goods and services and the timelines Of the project. However, the quantity of the goods is left to the control of the Contractor. But in the instant case, as per the Service Work Order, they are controlling both. As per Annexure '1 they are billing the goods and labour cost separately. Hence, these are two different supplies to be treated as such instead of composite supply. Annexure - I (shall be treated as part of SWO) Schedule of Item quantities with Specifications & applicable Rates Contractor: Company Name: Site Name: SWO: Location:- Infra Subject:- Service Work Order for Supply, Installation, Testing & Commissioning of Electrical Work (with Material plus Labour) at Sr.No. Description Unit Qty. Supply Labour Total amount Rate Amount Rate Amount 1. HT Panels ....
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....isdictional Officer, Sh. Said Hakim Supt., Division - III, Pune appeared and made written submissions. We were heard from both the sides. 05. OBSERVATIONS We have gone through the facts of the case. The issue put before us is in respect of a classification and rate of tax on transactions effected which would be on the lines thus - We have been informed of the activities carried on by the applicant which include design, engineering, supply, installation and commissioning of plumbing, firefighting and electrical infrastructure to a wide range commercial project. Applicant in furtherance of business has entered into an agreement that is draft contract agreement with a Developer/ Builder for electrical and plumbing work. Applicant has raised question on the basis of the draft agreement and by virtue of activity of the applicant claimed as covered by the scope of Notification No. 20/2017-Central Tax (Rate) dated 22/08/ 2017 and Notification No. 1/2018 dated 25th January 2018 as amended by inserting therein in item No (V) a new subitem (da) whereby composite supply of works contract as defined in clause (119) of section 2 of GST Act, supplied by way of construction, erection, commis....
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.... revised and modified from time to time and issued to the Contractor, and shall execute the work as per the terms, conditions and specifications contained in the Tender document, subject to any modifications contained in this Work Contract. 2. The scope of work includes all resources, material, machinery, Scaffolding, tools, tackles, Consumables, curing pipe, Light fixtures & wiring, control panel, etc. other than FOC material supplied by company unless explicitly mentioned. 3. Coordination with Client, Architect, Consultants, Project Manager, etc.; wherever applicable shall be included in Services of Contractors' Scope of Work. 4. The Contractor shall afford every reasonable facility to any other agency employed by the Company for carrying out of works relating to civil works, installations and other ancillary works if any, during the duration of the contract, excluding the defect liability period in the manner laid down in the said terms and conditions and shall make good any damages, etc., after the completion of such work 5. The responsibility of maintaining and security of client supplied material and assets shall lie with the Contractor. 6. Dewatering from Footing P....
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....lestone basis duly defined & mutually agreed while signing the Work Order. On receipt of such R.A. Bill and after an assessment amount shall be released upon thorough scrutiny of the said Bill within next 15 working days. 2. Similarly, upon satisfactory completion of awarded work, Contractor shall submit Full and Final Bill duly supported by all requisite measurements, reconciliation statement for Client supplied material and statement showing reconciliation of advances paid till date, etc.to our Billing department. Payment in the form of full and final settlement excluding 5% Retention amount shall be made upon thorough scrutiny of the Bill. Mode of Measurements:- Mode of measurements for all the tasks shall be in accordance with the provisions of IS 1200 and strictly in accordance with work executed as per the GFC drawings issued from time to time by our Architects / Structural Consultants. It mandatory & binding upon the contractor to check & confirm the BOQ quantities to the Client upon receipt of GFC drawings, prior to execution of work. Execution of Extra items/ Deviated items:- 1. The rates for deviated or extra items shall be derived from the Tender item rates a....
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....even if not indicated in item description. 3. Take of sheet of the Material, based on GFC drawing, required to complete the work in all respect, mutually agreed by both the Contractor & the Client shall be considered as the basis for arriving at Material Cost. 4. Basic rates of materials shall be indicated by client along with list of approved Contractors for 30 days payment credit. 5. Any variation in basic rate beyond a limit of (+/-) 5% due to market fluctuation shall be conidered for payment on actuals in respective RA bills subject to prior approval from client. 6. Labour component is to be derived on the basis of cost towards labour work for installation & other misc work including tools / tackles, specialized Equipments including any incidental charges for bonafide reasons required to complete the work in all respect even if not included in scope of work indicated in item descriptions. 7. Mark up on Material component is derived on material cost on the basic rate, any variation in amount due to change in basic rate & other bonafide reasons shall be considered for payment at actuals. 8. Taxes for the billing shall be charged on basic rate of material without....
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....mutually agreed terms, we will provide an ample storage space within the site premises. You need to ensure that the material procured & delivered at the work site under every lot shall be thus kept / properly stacked within the storage space defined & provided by the Client including an aid for its proper Lock & Key arrangement & which shall be dedicatedly controlled, operated & thoroughly secured by you & your team on day to day basis until the satisfactory completion & handing over of the awarded scope of work With due material reconciliation. Any pilferage, misplace or theft of the Client supplied material, which shall be further issued & kept under your control & custody shall be the sole responsibility of the Contractor & under such scenario, Contractor shall make amend for such losses & shall ensure that the same shall be procured, brought at site & installed in place by you without any delays at your sole risk & cost consequences. b. To prepare & submit the detail Project Report duly supported with all relevant documents / drawings & separate copy of Reconciliation report as well.. c. To prepare all necessary dockets with layout drawings duly supported with complete Write....
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....s hereafter & till the completion of work will be reimbursed by the Client at actuals. 3. Scope of Work:- The Scope of Work for the Electrical Infra Works shall comprise of the following and as mentioned in attached "Annexure B Bill of Quantities":- a. Based on our mutually agreed terms, we will provide & handover to you an ample storage space within the site premises. You need to ensure that the material procured & delivered at the work site under every lot shall be thus kept / properly stacked within the storage space defined & provided by the Client including an aid for its proper Lock & Key arrangement & which shall be dedicatedly controlled, operated & thoroughly secured by you & your team on day to day basis until the satisfactory completion & handing over of the awarded scope of work with due material reconciliation. Any pilferage, misplace or theft of the Client supplied material, which shall be further issued & kept under your control & custody shall be the sole responsibility of the Contractor & under such scenario, Contractor shall make amend for such losses & shall ensure that the same shall be procured, brought at site & installed in place by you without any delay....
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....vent of any variation in the material (both in the form of wastage or as an excess consumption ) noticed beyond a prescribed limit as defined herein above under Clause 3-C then same shall be account for on Contractors Part & the cost of the same at actuals shall be recovered from the respective milestone based bill or his Full & Final settlement. e. The Contractor shall also submit the relevant proofs of the payments made towards the Statutory Compliances like Labor Taxes, PF, ESIC, etc. as an enclosure with each Milestone Bill as mandatory submittals. In the event if the Contractor fails to satisfy Clients / Consultants in achieving good quality of work, desired speed of work and overall timely execution of the project then the client has full rights to terminate the contract by issuing a termination notice 7 days in advance. Client also reserves the right to get part or whole work done through any other agency at Contractors sole risk and cost and Consequences. 22. General Conditions & Special Conditions of Contract (GCC &SCC) a. Coordination with Client, Architect, Consultants, Project Manager, etc.; wherever applicable shall be the integral part of Contractors' Scope of Wor....
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....mposite supply and supply of goods is a principal supply. From the detailed scrutiny of the proposed contract we find that the contract like the one at hand which includes Design, engineering, work laying of RCC Hume pipe/GI pipe etc. for storm waterline and construction of chambers involves more than two taxable supplies in the nature of resources, material and machinery. We also notice that large number of service receivers of such bundle of services mostly expect plumbing work to be provided as a package in the ordinary course of business. In the light of above observation the plumbing contract constitute a composite supply as defined u/s 2(30) of the GST Act. As a corollary to this finding we now examine whether this transaction is covered by the definition of Works Contract as defined u/s 2(119) of the GST Act. We reproduce this definition as below: As per Section 2(119) Of the Act, "works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or....
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....ate our stand that the plumbing contract is indivisible works contract pertaining to immovable property within the scope of section 2(119) of the GST Act. We now take up second contract comprising of compete installation testing and commissioning and satisfactory handing order of substation electrical works, HT & LT cabling works, DG and cabling works, street light and cabling. In this contract we also find that applicant would be required to do various acts which includes design, supply, installation and commissioning of substation that is electrical infrastructure. This is also a turnkey project contract like plumbing contract discussed in the earlier part of this ruling. For the reasons discussed therein we also hold that electrical contract which involves supply of taxable goods and services is a composite supply as defined u/ s 2(30) of the GST Act and the said composite supply is works contract as defined u/ 2(119) Of the CST Act. We now take up second question raised by the applicant which read as below: "Whether can the applicant charge GST rate of 12% on MEP (Mechanical, Electrical & Plumbing Works) activities by availing the benefit of Central Tax (Rate) Notification ....